In sharply changing energy world, Louisiana, Gulf Coast expected to see big investment

With rising global demand, Louisiana's growing energy sector is expected to try to balance continuing fossil fuel-based production and worldwide exports against decarbonizing industrial and energy operations through the end of 2027, LSU researchers said Friday.

In trying to meet those twin goals, Louisiana will continue to see investment in energy and manufacturing, as LSU researchers assume that major shifts in trade policy and clean energy subsidies won't happen under the incoming Trump administration but easing of restrictions on new oil and gas development will.

By 2030, the Gulf Coast region of Texas, Louisiana, Mississippi and Alabama could see as much as $219 billion in liquefied natural gas investment, $151 billion for chemical and refining and other traditional industries, and $107 billion in energy transition projects, the LSU researchers found in their annual Gulf Coast Energy Outlook report.

Though oil and gas exploration and production are expected to rise both in the state and across the Gulf Coast, increasing production efficiencies led to forecasts for flat job growth and weak rig counts in Louisiana through the end of 2027, the LSU forecasters said.

Louisiana's petrochemical sector is expected to have added 1,200 jobs by year's end and experience around 1% annual increases for the next three years, as billions in new investments are expected to continue.

But researchers with LSU's Center for Energy Studies noted that for the first time since the center began tracking, investments in energy transition projects were expected to surpass those dedicated to liquefied natural gas by as much as $1.8 billion in 2025. That margin will expand over the following two years.

"This is an important finding and underscores how the Louisiana energy economy is becoming increasingly focused on decarbonization goals," the Gulf Coast Energy Outlook report says.

Louisiana industries are trying to find the most cost-effective ways to make low carbon products being sought by global markets.

The researchers assumed billions of dollars more in new renewable energy and other projects to produce less carbon-intensive products and energy would proceed under President-elect Donald Trump, who has aired skepticism of climate change and the outgoing Biden administration's massive investments into renewable energy.

Greg Upton Jr., an LSU associate professor who leads the energy center, said he recently visited congressional offices in Washington, D.C.

He wanted to understand what the new administration and Congress might do with some of the Biden-era clean energy incentives through the Inflation Reduction Act and the Infrastructure Investment and Jobs Act, also called the "bipartisan infrastructure deal."

"And kind of the answer I got is that the leadership now is looking at quote 'taking a scalpel to the IRA' but not really knocking it down or redoing it completely," Upton said during a presentation on the annual report Friday.

"So, could there be some tweaks? Of course, there could be. Sure there could be, but our kind of assumption is ... that these subsidies continue."

Asked what incentives might face the scalpel, Upton pointed to the comments of Elon Musk, a billionaire Trump donor and fixture in his orbit who will lead the president-elect's plan to cut government agencies.

Owner of Tesla, the world's largest electrical vehicle manufacturer, Musk recently told Politico that the $7,500 tax credit for electric vehicle purchases and other EV credits aren't necessary.

"So, that would seem like a logical one to look at," Upton said.

Another area that could face changes, though maybe not the scalpel's blade, is the proposed 45V tax credits for clean hydrogen. The Biden administration has not finished the rule-making for the credits.

"So, we could really, I think, go back to drawing board with that in a way that a lot of people in the industry might like the 45V updates from the Trump administration," he said, though this would add delay.

Hydrogen is seen as a potential fuel for decarbonizing Louisiana's fossil fuel-reliant manufacturing industries.

But, Upton added other tax credits that help underground carbon storage projects, known as 45Q after the related section of the federal tax code, aren't likely to go anywhere. They have support from industry and congressional leadership, he said, especially in Louisiana, where the industry is already important.

The LSU researchers also looked at the expected rise in electrical demand in the United States after years of flat growth. On the Gulf Coast, new manufacturing, new clean technology facilities and data centers are driving higher demand.

D. Andrew Owens, a retired Entergy regulatory research director who works as a fellow for the LSU center, said he has estimated that the new $10 billion Meta AI data center in north Louisiana will have the electrical consumption equivalent of as much as three cities of New Orleans.

Entergy is proposing more than 2,000 megawatts from three natural gas plants and 1,500 megawatts from solar power for the center.

"The size of it is just mind-boggling," he said.

The project's demands could end up constituting 15% to 20% of all electricity used in the state.

Other data centers proposed in Mississippi and Ohio are 1,000 to 1,500 megawatts each, Owens said.

"So, the scale is just beyond anything, from an industry perspective, that anyone can comprehend. I mean much larger than a typical refinery, if you want kind of put it in some perspective," he said.

Owens added that long term, these rising demands could create conditions for new nuclear projects on the Gulf Coast, perhaps with newer smaller scale plants being developed.

However, in the energy report, the LSU researchers also conducted three "thought experiments" to weigh the impact of this rising electrical demand and reached a surprising conclusion.

They weighed if all of the U.S. light-duty vehicles were replaced with electric vehicles, if all homes had electric heaters and if data center growth followed the most aggressive estimates.

Though each of those scenarios would sharply drive up demand for electricity, the vehicle and heater switches would actually cut total energy use, as measured British thermal units, because of inherent efficiencies in the electrically based systems. Data centers would drive up energy use also but only slightly.

The researchers concluded that while share of energy coming from electricity could increase in the United States, the total domestic demand for energy isn't expected to increase significantly, opening up opportunities for further export of U.S. energy to developing nations.